Two major players in the insurance and financial management sector are currently showing indications of a trend shift, setting the stage for a significant breakout. The recent price movements and the formation of bullish technical patterns serve as a clear signal to investors and momentum traders. This suggests that a substantial shift in momentum is in the making, potentially leading to a breakout.
Despite shares of both insurance companies having faced a challenging year so far and notably lagging behind the broader market, a reversal of fortunes might be on the horizon.
Prudential Financial (NYSE: PRU) and MetLife (NYSE: MET), distinguished insurance and financial management giants, have experienced negative performance year-to-date (YTD). Nonetheless, given their encouraging technical indicators, solid financials, and appealing dividend yields, is this the opportune moment to consider investing in these two stocks, especially considering the prospect of an imminent breakout?
Prudential Financial (NYSE: PRU)
On August 1st, 2023, Prudential Financial released its quarterly earnings, reporting an EPS of $2.94, slightly below the expected $3.04 by $0.10. The company's quarterly revenue was $12.64 billion, slightly under the estimated $12.68 billion. Over the past year, Prudential Financial has achieved $3.00 in earnings per share, with a current price-to-earnings ratio of 31.2.
Anticipated growth in earnings for the coming year stands at 11.01%, expected to rise from $11.81 to $13.11 per share.
Prudential has an impressive dividend yield of 5.33% and has exhibited strong growth over the years. Analysts are mixed on PRU, with a consensus rating of Hold based on nine analyst ratings. Although the ratings are mixed, with four analysts rating the stock as a Hold and three as a Sell, analysts still see upside for the stock with a consensus price target of $101.45, predicting over 8% upside.
Shares of PRU broke out of the consolidation pullback last week and reclaimed all three key Simple Moving Averages (SMA), signaling a breakout and clear momentum shift. Going forward, if the stock can continue to hold above the previous resistance of $92, thereby turning it into support, a move toward the next level of resistance at $98 will become a real possibility in the near term.
MetLife (NYSE: MET)
MetLife reported its Q2 2023 earnings, surpassing expectations with an EPS of $1.94, beating the estimated $1.85, and revenue of $16.62 billion, slightly below the expected $16.91 billion, reflecting a 7.4% YoY increase. With an EPS of $2.57 and a price-to-earnings ratio of 24.2, the company projects an 18.89% earnings growth, anticipating a rise from $7.78 to $9.25 per share in the coming year.
MetLife's dividend yield is 3.34%, and though its $2.08 annual dividend is lower than the average among listed financial firms, $6.21, it surpasses its NYSE competitors, $1.53. Analysts foresee promising prospects, rating it a Moderate Buy, with a consensus price target of $77.40 and an anticipated 24.30% stock upside, supported by eight Buy and three Hold recommendations, positioning it favorably compared to the Hold rating of the finance sector.
With the stock trading confidently above its rising 5-day Simple Moving Average (SMA) and 50-day SMA, while consolidating in a tight range near the pivot-high, it is now showing a strong bullish trend. The recent uptrend and consolidation above two key moving averages is an evident change of character for the stock and signals a significant shift in momentum and direction.
If MET can continue to base over the consolidation resistance of $62, it might be gearing up for a move back above the 200-day SMA and potentially $66.
